Kenseth was born in Cambridge, Wisconsin. He made an agreement with his father, Roy, that Roy should buy a car and race, and Matt would work on the car until he was old enough to race. Kenseth began stock car racing in 1988 at the age of 16 at Madison International Speedway. "My dad bought a car when I was 13 and raced it at Madison," Kenseth said. "Neither of us knew much and it was a learning experience. He continued to race in 1988 and 1989. My first car – what might be considered a sportsman – was a 1981 Camaro that Todd Kropf had driven to championships at Madison and Columbus 151 Speedway. On the third night out I won a feature. I ran 15 features in 1983 and won two of them." "The first night out in the Kropf car Matt won a heat race," said Kenseth's father Roy.
"The third night he won the feature by holding off two of the best drivers at the track, Pete Moore and Dave Phillips, for 20 laps. Matt was smooth. I knew then he was going to be a racer." He ran for the points title on Saturday nights at Wisconsin Dells in 1989. He finished second in points and won eight features. On Friday nights, he ran about half of the races at Golden Sands Speedway and half at Columbus 151 Speedway. In 1990, he bought a late model from Rich Bickle. In the season-opening race at Slinger Super Speedway, Kenseth inherited the lead and won his only race of the season when track champion Tony Strupp had a flat tire.
He finished sixth in season points and won the track's rookie of the year award. Kenseth entered fifteen ARTGO events that season and raced in 40 features that year. After graduating from Cambridge High School that summer, Kenseth worked for four years selling and shipping parts for Left-hander Chassis, a late model racecar chassis manufacturer just south of Wisconsin in Illinois. In 1991 he won the ARTGO race at La Crosse Fairgrounds Speedway to become the youngest winner in the series' history. He passed Joe Shear and Steve Holzhausen, and held off Steve and Tom Carlson for the win. 1992 was a difficult year for Kenseth.
He won three races and blew up more engines than he could count. He was ready to quit racing after the season. "I felt we were at a standstill", he said. "I wasn't gaining. My dad and I had some major discussions at the end of the year. We had to find the dollars for a good program or I told him I would rather not race." Kipley Performance loaned a motor to Kenseth for the season-final race at La Crosse and the team ran better. Kenseth built a new car for 1993 using a Kipley engine. He used the car at Madison to win eight features and finished second in the points. Mike Butz offered Kenseth the chance to race his late model, and it took some time for the combination to stop struggling before they started winning features. At the end of the season, they won the final short track series race at Madison, La Crosse, and I-70 Speedway.